Archive for June 17th, 2010

The Punjab budget 2010-11, due today, is unique in a sense that it will be first after the 18th Amendment, which has made ‘agriculture’ a purely provincial subject. The question now haunting the farming community is whether it can replace the federation’s role in the sector. No one is sure, at least so far. Their confusion stems from the fact that it seems impossible for the provinces to undertake crop pricing, import of fertiliser and formulate agri-trade policies.

It is the Ministry of Food and Agriculture that assesses the need and imports are made by the Ministry of Industries through the Trading Corporation of Pakistan. Trade policy relating to agriculture and horticulture is formulated by the Ministry of Commerce in which Trade Development Board of Pakistan (TDAP), Pakistan Horticulture Development and Export Company (PHDEC) are involved.

Fixing of indicative prices has also been a federal forte so far. The federation has been setting the uniform prices of major crops (wheat, sugarcane and rice) to avoid provincial distortions. How would the province go about them or even can they? It is a big question mark.

The federal and provincial governments should have gone into a parallel exercise along with discussions of ending the concurrent list to clarify such issues. The farmers are confused about how things would work out.

But still, there are many areas where provinces can make a difference and farmers expect their government to divert funds to agri-research, building farm-to-market roads, efficient marketing structures and promotion of value addition. But the provincial government’s performance leaves much to be desired.

As far as research in new seeds is concerned, out of major four crops, the province does not have seed for three crops. Where it does have, it is too old to make any difference. Take the example of rice seed, which brings $2 billion in export money. It is almost 12-year old and is vulnerable to all kinds of infections and has been long over due for replacement.

So is the case of wheat seed, which is even older and has declining output and increasing vulnerability. The farmers feel that budget is an opportunity for the Punjab government to set the context for future preferences for the sector, and spare substantial allocations for agriculture research.

Marketing of agriculture produce has been the weakest link in the agriculture chain so far. Over 40 per cent horticulture produces go waste in the field as these cannot be transported to markets on time.

If the Punjab government somehow is able to create a cold chain and save that 40 per cent produce, it can correspondingly increase farmers’ income and pull them out of poverty trap. The special department (agriculture marketing) set up to create efficient marketing system throughout the province, but the initiative somehow lost steam as soon as it was launched. For the last one decade, the department has been an additional burden on the provincial exchequer without any contribution to marketing structures.

Marketing needs storages, which give farmers’ capacity to hold their produce in time of glut till the time they get better price. The provincial preference in this regard has been pathetic. Last year, it allocated Rs100 million for creating wheat storage but pulled the money back some six months down the line as provincial finances tumbled. With this kind of attitude, how would the government make a difference this time, no one knows for sure?

But the farmers still hope that the provincial government does realise the importance of the storages and spare more funds and force the department to improve its performance.

They also insist that provincial responsibility has increased manifold with the federation reducing its role. It must try to promote agri-industry (value-addition), which presently stands at a paltry 16 per cent, through public-private partnership. Its current model prepared by the provincial government is too bureaucratic to make any difference.

The current model charges the private investor to take the project to Public and Development (P&D) Department, which is referred to finance department and then to accountant general for audit process and then to Treasury. The project comes back through the same channel and gives total control over the project to bureaucracy. Why should a private investor invest even 30 per cent of the project and then give control of his investment to bureaucracy. One hopes that government will loosen up such restrictions and make substantial allocations for the value-addition in the budget.